Making Flexibility Work: A Case Study

The arguments for flexible work arrangements in law firms are many. Flex time can provide a firm with a substantial advantage on three fronts: attracting and retaining women during their child-raising years; retaining talented attorneys who do not desire partnership, and finally, the ability to ease partners as they get closer to retirement.

Creating workable flexible arrangements faces three major challenges:

The tension between part time revenues with full time overhead

Availability, resources and team work necessary to effectively serve clients.

Internal communication and perception of fairness.

With the best of intensions there have been failed
attempts in many firms. At worst, valuable and
productive partners see themselves subsidizing
part time attorneys who are not available when
the chips are down.

When this happens firms
abolish the flex time arrangements in order to
avoid losing full time partners.

Profile of our Case Study

Firm: Holland & Hart

Headquartered: Denver, Colorado

Size: 350 attorneys, 13 Offices

Track Record: Flex Time policies have been
working since 1990

Partners on Flex Time: 16 (13 women, 3 men)

Associates on Flex Time: 14 (all women)

Contract Associates: 13 (all on flexible
arrangements, paid hourly, some work at home)

The Policies

There are two written Flex Time Policies, one for
partners and one for associates. Both policies
require the attorney desiring a flex time
arrangement to submit a written plan which
includes proposals for the percentage of full time
commitment desired, a typical schedule, an
economic analysis including proposed
compensation, and any special arrangements
proposed to reduce overhead. Such special
arrangements can include:

taking an interior or
smaller office,

office sharing,

reducing benefits,
and

reduced secretarial support.

The policy
requires the plan demonstrates “a reasonable
opportunity for the continued professional
development of the requesting attorney. The
partner plan includes commitments to generate
meaningful work in quality and quantity to allow
continued professional development”.

The
policy states that no flex time arrangement
should be designed such that it is subsidized by
the firm – it must stand on its own economics.

The Gatekeeper

The policy for associates and contract associates
is managed by a Flex Time Partner. This role
has historically been held by a female partner
who is or has been on a flex time program and
who is sufficiently concerned about both the
success of the program and the profitability of
the firm to be an effective gatekeeper.

The Flex
Time Partner helps the applicants prepare the
proposal, and especially the economic analysis.
The proposal must be approved by the
applicant’s Practice Group Chair, the Flex Time
Partner and the Managing Partner.

The economic analysis first estimates revenues
to be generated by the partner (proposed billable
hours x rate x realization rate). In order to
determine overhead applicable to the attorney,
the firm’s overhead is divided into a fixed and a
variable component. Fixed overhead included

rent,

malpractice insurance and

other matters
which will fully apply regardless of the time
worked.

Variable overhead includes

secretarial
costs,

office supplies etc.

The ratio of fixed and
variable costs vary from office to office;
however, total margin ranges from 40% to 55%.
The overhead charged to the applicant is equal to
100% of the fixed overhead and the percentage
of the variable overhead which is equal to the
percentage of the proposed billable hours to the
expectation for a full time partner.

The policy does not provide for a payback to the
firm if subsidization occurs. However, when
that occurs, it is taken into account in the next
compensation round for partners. The partner
can adjust her percentage midway through the
year and is encouraged to reduce her percentage
if shortfalls are occurring. When a flex time
partner’s billable hours exceed the percentage
agreed to by more than 5%, a year end
adjustment is made.

The Flex Time Policy for Associates is
essentially the same in terms of procedure.
However, the Policy addresses several issues.
The first is the belief that a new attorney needs a “period of immersion” in order to foster
professional development. For that reason, part
time status for a first year associate is granted
only under extraordinary circumstances. Flex
time arrangements are difficult to sustain for
junior associates because of lower rates and full
overhead allocation.

At time of writing there are
no first year associates with flex time
arrangements and only four in the next three
classes. By contrast, there are ten senior
associates in the program. Most associate
arrangements are designed around billable hours
at the 80% level or more and partner
arrangements range from 90% to 65% of normal
billable hour expectations.

Flexibility before Retirement

Convincing senior partners near retirement to
adopt a flex time arrangement has taken some
time. Senior partners don’t want the stigma of
the “mommy-track.” Some argue that a flex time
arrangement results in an immediate reduction in
compensation, where it would otherwise be
delayed for a year or two under the firm’s
retroactive system of partner compensation
structure. However, they are becoming
convinced that the reduced stress resulting from
lower billable hour expectation balanced with the
assurance of increased compensation if they
exceed that expectation.

These arrangements are
made directly with the Managing Partner rather
than the Flex Time Advisor (to her great relief!).
Their “units” or “points” are shown on the
partner roster at the 100% level. Thus they avoid
the dispiriting decline in such awards over the
years.

Conclusion

For associates and younger partners, the greatest
challenge is to achieve the flexibility to meet the
needs of the client projects. Making it work
requires open communication and team work in
the practice group. Making it work at home
requires commitment and flexible child-care
arrangements. In part, it is a question of attitude
and ability to develop the kind of child care
arrangements which allow the necessary
responsiveness.

This challenge becomes
particularly serious where flex time associates
are clustered in one office or practice group. The
best flex time associates have the tools to stay
connected (Blackberry or other similar PDA),
can move easily between work and home, and
possess an uncanny ability to intelligently
communicate with a client while fixing dinner.
Those who have trouble achieving success are
those who are unable to move smoothly between
these roles and who are too rigid with their time.

Overall, the flex time program has been very successful for Holland & Hart which has allowed it to attract and keep the best and brightest while keeping senior partners engaged while successfully facilitating succession.